In the previous BizPlanIt Newsletter we addressed the importance of including a solid and realistic exit strategy in your business plan. A well-written exit strategy increases your chances of cashing in with investors because it addresses one of their most important issues - how they will ultimately cash out. However, most potential investors will never even bother reading your exit strategy if you can't grab their attention from the start and excite them about your business. How do you do it? Simple. Write a brilliant executive summary.

Never forget that capital sources are always buried under a desk full of business plans and financing proposals. With this many funding requests, the time dedicated to making an initial judgment about a business plan is limited. Investors normally remedy this backlog of business plans by simply reviewing the executive summary to determine if any further investigation is warranted. To some degree, the executive summary resembles a resume, allowing the reader to quickly decide which business plans will receive serious consideration.

Your business plan may be outstanding. It may look wonderful and include colorful graphs and charts. And it may be very impressive and compelling if it was read from cover to cover. But, to the surprise of many entrepreneurs, the executive summary is often the only part of your business plan that an investor ever reads. Essentially, you have five minutes to grab the attention of your reader with a concise description of your opportunity and motivate them to read further. Following the tips listed below and avoiding bothersome pitfalls will help keep your business plan from landing on the bottom of the pile, or even worse, in the trash.

Your executive summary should:

• Provide a clear, concise and compelling summary of your business
• Outline your unique advantages for achieving success
• Demonstrate why your business concept will work
• Simply and clearly demonstrate management's objectives
• Incorporate powerful key sentences from other parts of your plan
• Be written in a positive and confident tone
• Be brief - able to be read in less than 5 minutes
• Stand alone as a type of "mini" business plan within your business plan

A successful executive summary presents the highlights of your basic business concept and opportunity. Which highlights should be included? A good executive summary should demonstrate:

• A business concept that makes sense
• A clear plan for success
• A capable management team
• A clear, specific, and definable market
• Significant competitive advantages
• A solid and believable summary of the financial projections
• An excellent chance for investors/lenders to receive a healthy return

The format and organization of your executive summary will vary based upon which issues are most important for your particular business. But regardless of the format, every executive summary should include the following areas or subsections:

The Concept and Opportunity
It should immediately grab the attention of your reader. This is often best achieved by explaining why your business is different or unique. Clarify your business advantages, how you can break into your market first, the benefit of your proprietary product, or how research supports a significant customer demand for your product or service. Essentially, what differences or characteristics will lead to success?

The Product or Service Description
Describe your product or service in terms of its benefit to your potential customers. How does it work? What is it used for? Where is it sold? How much does it cost? How does the customer benefit? Remember to limit yourself to highlights in this section. Be brief.

The Market
Who is your customer? How large is your market? Who are the competitors? Why are you better? What are your market share projections? Your reader must be convinced that potential customers will have the want, need, and ability to purchase your product. Don't try to avoid the fact that you have competitors. Instead, explain how you can gain market share with your business advantages.

The Management Team
Describe the principals of your business and how they will lead to your success. Is it clear your team is well-rounded with the experience, expertise and capabilities to achieve the goals outlined in your business plan? Does your board of directors or advisors bring credibility and experience to the table? Fair warning – management weaknesses will ensure that readers will go no further.

The Finance Requirements
How much money has been invested to date? What are your earning projections for the next three years? What amounts are currently required? What will the funds be used for? From whom do you expect to receive your investment? What specific return do you offer an investor? What is the exit strategy, in terms of both time and return?

Now that we've outlined the issues to address in your executive summary, lets consider the things you should avoid. What areas would lead a reader to the conclusion that you have a poorly written executive summary? If you:

• Fail to identify your special or unique opportunity
• Fail to clearly demonstrate what your venture is all about
• Fail to identify what management will accomplish and how
• Make general and unsubstantiated claims
• Use wordy and unorganized language

At what point in the writing process is it best to write your executive summary? There are three schools of thought. The first says prepare it before you write the rest of the business plan. The second says write it before, then again afterward to combine the best of both. The third says prepare the executive summary only after the rest of the plan is complete.

Which approach is correct? It's really a personal decision, but it has been our experience that preparing the executive summary when the rest of the business plan is complete is fairly effective. This allows us to summarize the plan after all the information has been laid on the table with the hindsight of compiling the entire plan. We normally pick key sentences that highlight the product benefits, market opportunities, and strategic advantages. Think of it as 20/20 hindsight.

Remember to review your executive summary many times and ask yourself whether it grabs the reader's attention. Will they be excited about your business? Will they want to read the rest of the business plan? If the answers to these questions are no, rewrite it. Show it to a friend or business associate and ask them to be critical. Many times after someone reads your executive summary they will say "It's great, but what about…". If you find yourself explaining important information to someone after they have read your executive summary, then it is likely that that information should be included in the document.

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